The role of slotting fees and introductory allowances in retail buyers’ new-product acceptance decisions

Although slotting fees and introductory allowances have become well established in the grocery and other industries, they remain a source of controversy among channel members. Retailers claim that these fees and allowances help mitigate the risks associated with new-product acceptance. Manufacturers counter that retailers are abusing slotting fees and allowances by using them as a source of profit. The authors investigate this controversy by empirically examining the role of slotting fees and allowances in the retail buyers’ product acceptance decision process. Results provide evidence to suggest that introductory allowances are indeed being used by retailers in the sample to offset perceived risks and costs of carrying new products. However, findings regarding slotting fees are much less supportive of retailers’ claims. J. Chris White (Ph.D., Texas A&M University) is an assistant professor at the University of Central Florida. His primary research and teaching interests include marketing strategy and management, retail management, international strategy, and promotion strategy. Lisa C. Troy (Ph.D., Texas A&M University) is an assistant professor of marketing at Utah State University. Her primary research and teaching interests include product innovation and new product development, marketing strategy, retail management, and international marketing. R. Nicholas Gerlich (Ph.D., Indiana University) is an associate professor of marketing at West Texas A&M University. He is actively involved in the development of Web-based courses and has research interests in the marketing of new products.